March 22, 2014

I have mentioned previously about the dispute between the Chabad Jews & Russia, over the requests for the return of two disputed collections of books & manuscripts.

A few days ago, I came across this interesting review of the current state of the case (which still remains a long way from being resolved. Now, although I don’t believe the courts of the District of Columbia were being particularly sensible in some of their judgements on the case, there are many things that can be learned from it.

In many cases involving cultural property restitution claims, there is a split between those who feel that the case should be settled by diplomatic means, and those who believe it should be settled through legal action. The reality however isn’t so simple. In many cases, the ideal option would be to use informal negotiations to solve the issue, but what happens when this doesn’t work? If the party currently holding the disputed artefacts feels that they are in a comfortable situation & feels their ownership is secure, what reason is there for them to want to enter into some sort of negotiations where the aim of the other party is clearly to take back the artefact. One might suggest, that moral obligations or overwhelming public opinion ought to be enough of a lever, to start negotiations, but the number of well founded restitution cases that continue to be stonewalled by large institutions around the world shows that this is often not the case.

It is clear that sometimes, more is needed, at least as a catalyst to start serious negotiations. Italy was pressing for years for the return of such items as the Euphonios Krater from the Metropolitan Museum, but was only successful once the threat of legal action made the Met enter into serious negotiations. Legal actions is far from the only way of doing this however. Other countries such as Iran and Egypt have experienced success, following threats to withdraw cooperation with the countries or institutions in question.

What all this is leading to, is that whether or not we feel it is the right approach to take, legal action is sometimes going to be taken as a means to resolve restitution cases. Legal action can take many possible forms, and if you got five sets of lawyers in the room, each would have different ideas about how to approach a specific case. What this case goes to show though, is that depending on the circumstances, even if one wins the legal case, the means of enforcing such wins in international disputes are limited. In the case discussed in this article, the Chabad Jews won the case, the court has tried (albeit in a somewhat presumptuous / naive way) to enforce the ruling (and risked creating a major diplomatic incident in the process), but has so far been unsuccessful in progressing things beyond the status quo at the outset of the case. Russia still holds onto the manuscripts & still appears completely dis-inclined to consider returning them.

What is needed in such cases is an international forum of some sort (if it is legal action we are talking about, this would have to be a court, but there are other options). There are already the precedent of international courts, such as the International Criminal Court in the Hague, but the reality is that the handle only very specific cases & cultural property falls far outside their remit.

Within the Europe, there are two additional options (that have as yet been unexplored by Greece), the European Court of Human Rights & the European Court of Justice. Organisations such as UNESCO form another possible entity that could oversee the Adjudication of cultural property claims, and it is through their mandated mediation process that Greece hopes to solve the dispute over the Parthenon Sculptures. The key issue here however is that there is no obligations for countries to enter into the mediation process. At present, to the best of my knowledge, Greece has had no luck in getting Britain to actually enter into the mediation with them.

At least among advocates of the return of the Parthenon Sculptures, legal action continues to be a divisive issue, although I believe that to an extent, this is because people worry about the risks it might also carry & sometimes because they do not fully understand the nature of the tools available to them. Where cases can not be moved forward by diplomatic means though, other options are needed, and this is one of the clearest paths to take in such instances.

Introduction
Nationalization of looted property continues to trigger international legal disputes. It has been almost nine decades since the Lubavitch Chasidim or Chabad Chasidim (Chabad), a Jewish religious entity, began the quest to reconstitute its collection of sacred books and manuscripts currently held by the Russian Federation.[1] While Chabad is now a New York incorporated entity, it has strong roots in the Russian Empire from which it emerged.[2] This litigation highlights the challenges in resolving historical disputes against a foreign sovereign in national courts.

The property contested in Agudas Chasidei Chabad v. Russian Federation, et al. consists of a library with more than 12,000 works dating back to the 1770s (Library) and an archive of over 25,000 pages of Chabad Rebbes’ documents (Archive).[3] Collectively, they are referred to as “the Collection” in court proceedings.[4] Chabad considers the Collection to be sacred and the Archives to be an “essential legacy . . . something concrete that . . . incorporates in itself both the sanctity, the very presence, the very personality of the Rebbe himself.”[5]
The Collection has had a tumultuous history having traveled and exchanged hands extensively starting in 1915 when the Fifth Rebbe stored the Library in a warehouse in Moscow for safekeeping when escaping the advancing German army.[6] In 1920, the Soviet Department of Scientific Libraries (SDSL) acquired control of the Library and relocated it to a Soviet holding.[7]

The Sixth Rebbe took the Archive to Poland in 1933.[8] Following Nazi Germany’s attack in 1939, the Sixth Rebbe fled to the United States leaving behind the bulk of the Archive,[9] which was removed from Poland to Germany by Nazis and later removed from Germany by the Soviet Army as war booty.[10] Thus, by the end of World War II, the Collection ended up in Soviet repositories.

Efforts to Recover the Collection
Throughout the 1990s Chabad engaged in fruitless efforts to recover the Collection. In 1991, the Jewish Community of Lubavitch Chassidim, representing Chabad in the Soviet Union, requested that an arbitration court order the Library returned to Chabad.[11] Thereafter, a State Arbitration Tribunal “held that the Soviet government had failed to prove the Library ‘acquir[ed] a status of National property’” and ordered the Library returned to Chabad.[12] Nevertheless, on the cusp of the collapse of the Soviet Union, the Chief State Arbiter reversed the order and directed the Library to be sent to the Jewish National Library in Moscow.[13]

Chabad claims that in 1992, shortly after the rise of the Russian Federation, “the Deputy Chairman of the Russian Federation ordered . . . the Library to [be transferred] to the Chabad Delegation.”[14] The Chabad Delegation, however, allegedly was unable to retrieve the Library because their efforts were hindered by an anti-Semitic mob.[15] Later, the new order to return the Library to Chabad was reversed again by the Deputy Chief State Arbiter.[16]

In 2004, Chabad sued the Russian Federation and multiple state agencies in the U.S. District Court for the Central District of California seeking the return of the Collection, alleging violations of international law.[17] Defendants challenged the court’s “jurisdiction under the Foreign Sovereign Immunity Act (FSIA). . . , under the act of state doctrine, and under the doctrine of forum non conveniens.”[18]

2006 Decision Finding Jurisdiction
In 2005, the case was transferred from the U.S. District Court for the Central District of California to the U.S. District Court for the District of Columbia.[19] The Court ruled that it had jurisdiction over the Archives, but not the Library, and that Washington, D.C. was the appropriate forum.[20]

Chabad and defendants appealed, whereupon the U.S. Court of Appeals for the District of Columbia rejected the defendants’ arguments that no jurisdiction existed. Furthermore, the Court found that the U.S. District Court for the District of Columbia had jurisdiction over both the Library and the Archives.[21] After the case was remanded, defendants “informed [the] Court that defendants ‘decline[d] to participate further in this litigation’ and ‘believe[d] this Court has no authority to enter Orders with respect to the property owned by the Russian Federation and in its possession.’”[22]

2010 Ex Parte Decision
Undeterred, Chabad proceeded in its efforts and moved for Entry of Default Judgment against the defendants on May 5, 2010.[23] The Court found it could enter a default judgment against foreign sovereigns, pursuant to FSIA, if the claimant “establishes [the] right to relief… by [affidavit or] by evidence satisfactory to the court.”[24] In a FSIA default proceeding, “a plaintiff ‘must present a legally sufficient prima facie case, i.e., a legally sufficient evidentiary basis for a reasonable jury to find for plaintiff.’”[25] Accordingly, the Court reviewed the evidence and considered whether an exception to FSIA supplied the necessary jurisdiction.[26] The Court found the Russian Federation was not entitled to immunity under the four-prong “expropriation” exception test and that entry of default judgment was appropriate.[27] Specifically, the Court found that there was: 1) a “right in property” at issue; 2) which was “taken in violation of international law”; 3) because “that [taken] property. . . [was] owned or operated by an agency or instrumentality of the foreign state”; and 4) and “that agency…is engaged in a commercial activity in the United States.”[28]

In regards to the first prong of the “expropriation” exception test, the Court found that the Collection was communal property of the entire Chabad movement.[29]

Addressing the second prong of the test, the Court noted it had already determined there had been a “taking” of the Archive.[30] Moreover, the Court identified three distinct instances of “taking” of the Library in violation of international law: “the initial seizure of the Library during the Bolshevik Revolution and Russian Civil War,” the “unfulfilled promises by the newly constituted Soviet government to return the Library,” and “in 1992 when the Russian Federation… decided by official decree to close to [Chabad] all executive and judicial avenues of possible retrieval of the Library.”[31] The Court found these takings had been “discriminatory, not for public purpose and did not result in payment of just compensation” such that the Library had been taken in violation of international law.[32]

Reviewing the third prong, the Court found sufficient evidence that the Russian State Military Archive and State Library were agencies or instrumentalities of the Russian Federation, an issue conceded by defendants in their argument on appeal, and that they possessed the Collection.[33] Finally, the Court found the fourth prong was met as defendants were engaged in a commercial activity in the United States because they “‘sometimes execute[d] jobs for money’” such as receiving royalties from American publishers.[34]

Consequently, the Court ruled that Chabad met its burden and established its right to relief against all defendants.[35] The default judgment motion was granted on July 30, 2010.[36]

2011 Order Permitting Execution of the Judgment
Chabad provided notice of the opinion and default judgment to defendants.[37] In January 2011, the Russian Ministry of Justice sent the Court a letter proclaiming that, “‘the Russian Federation hereby returns without judicial review all court documents.’”[38] Thereafter, Chabad petitioned the Court to permit Chabad “to pursue execution of its judgment and imposition of sanctions on all defendants for failure to return the collection.”[39]

According to Section 1610 (c) of FSIA, a plaintiff seeking to enforce a judgment must demonstrate that: “first, each defendant . . . receive[d] notice that judgment has been entered against it; and second, each defendant [was] given an adequate opportunity to respond.”[40] In July 2011, the Court found all defendants received notice of the entry of default against them.[41] The Court also deemed ample time had passed to evaluate and respond to the notice of the 2010 ruling.[42]

Defendants’ failure to comply with the 2010 default judgment resulted in the Court allowing Chabad “to attach and execute property not otherwise subject to immunity under FSIA or any other federal statute [in the hope that it] may aid [Chabad] in its pursuit of the return of the [Collection].”[43] The Court also “direct[ed] defendants to show cause why they should not be held in civil contempt” despite the defendants refusing to participate in the legal proceedings.[44]

2011 Ban on Art Loans from Russia
The Court summarily dismissed concerns that the Court’s actions could permit attachment of immune cultural objects in the 2011 decision noting that “with respect to any art or artifacts belonging to Russia and currently in the United States, the Court reaffirms what should have been obvious beforehand: absolutely nothing in today’s order has the effect of removing or altering any protection for cultural objects subject to immunity under 22 U.S.C. § 2459.”[45] Nevertheless, there was a backlash from the court’s decisions.[46] For example, Russian state cultural organizations banned loans to exhibitions at the Metropolitan Museum of Art and the National Gallery.[47]

2013 Sanctions Decision
In January 2013, the District Court for the District of Columbia granted Chabad’s request for contempt sanctions against defendants for failure to return the Collection to Chabad pursuant to the July 2010 judgment.[48] The Court reasoned that it had the authority to issue such fees and that defendants had demonstrated they did not intend to comply with the 2010 judgment.[49] The United States argued against sanctions claiming that United States’ courts cannot issue civil contempt sanctions against foreign sovereigns under FSIA and such sanctions would negatively affect the United States’ foreign policy.[50]

The Court, however, found that federal courts have the power to enforce their orders if “‘the putative contemnor has violated an order that is clear and unambiguous,’” and the violation was “‘proved by clear and convincing evidence.’”[51] The Court found that the defendants were not compliant with the Court’s orders, which the United States had conceded, and determined that it could issue sanctions against foreign sovereigns.[52]

Moreover, the Court found that the United States “mistakenly conflate[d] the entering of a sanction with its enforcement,” and the only matter before the Court in 2011 was the authority of the Court to enter contempt sanctions.[53] The Court also found that the potential for sanctions had already motivated the defendants to meet with Chabad for the first time since the defendants withdrew from the proceedings in 2009.[54] Furthermore, the Court dismissed the United States’ concerns regarding the negative impact of the sanctions on foreign relations in general and on diplomatic efforts to resolve this dispute specifically.[55] Finally, the Court dismissed the United States’ concerns regarding the Russian Federation’s refusal to loan cultural works to United States entities noting that any cultural works the Russian Federation loaned to United States entities would be immune from attachment.[56]

Accordingly, the Court found contempt sanctions of $50,000 per day were appropriate until defendants comply with the 2010 Court order.[57]

Conclusion
What is left in the Court’s arsenal if defendants continue to ignore the default judgment? This stalemate demonstrates the challenge of attempting to resolve historical international disputes through national court systems. Perhaps it is time to return to diplomatic channels for resolving the standstill or to consider an alternative dispute resolution mechanism such as arbitration. In the meantime, the prospects of Chabad reclaiming the Collection from defendants by means of the ongoing litigation seem bleak.

Postscript
On July 1, 2013, the Ministry of Culture of the Russian Federation and the Russian National Library brought a claim in the Highest Arbitration Court of the Russian Federation against the U.S. Library of Congress, with Chabad as a third party, seeking to recover seven books loaned from Russia to the Library of Congress.[58]

These books, a part of the disputed Collection, were turned over by the Library of Congress to Chabad in New York in the 1990s, allegedly for limited time use.[59] The compromised position of the U.S. Library of Congress vis-à-vis the Chabad Collection further highlights the complexities of resorting to domestic courts for international issues involving foreign sovereigns.

About the Authors:
Irina Tarsis, Esq, is Chair of the American Society of International Law Cultural Heritage and the Arts Interest Group. She is the founder of Center for Art Law, and in her practice she specializes in international law, copyright and art law. Elizabeth Varner, Esq, is Co-Editor-in-Chief of the American Society of International Law’s Cultural Heritage and Arts Review. She is the director of the National Art Museum of Sport, Vice-President of the Lawyer’s Committee for Cultural Heritage Preservation, Adjunct Law Professor at Indiana University’s Robert H. McKinney School of Law and works with cultural heritage, museum, art, arbitration and intellectual property law issues.

[10] Id. at 13. In 1974, the Polish Government transferred some of the documents from the Archive to Chabad in New York; however, the vast majority of the Collection’s contents remained in possession of the Russian repositories. Id.

[59] See, e.g., “Минкульт и “Ленинка” подали в суд на Библиотеку Конгресса США” Newsru [Ministry of Culture and Leninka filed a suit against the Library of Congress of the United States of America] (July 1, 2013), available at http://www.newsru.com/cinema/01jul2013/shnrson.html.

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